My first renovation of 2020 is in the books! If you would like to watch the video version of this post, I have it for you at the bottom of this post.
This reno was pretty quick, as most smaller properties are. This property was a 3 bedroom, 1 bathroom house in North Tulsa. This deal is a bit different than anything else I have done so far for three reasons.
First, it was in North Tulsa, which I haven’t dabbled in much at the time. Second, it was my first deal with my new investing partner. Lastly, and most importantly, it was the first project in my new investment strategy for 2020.
Let me break down exactly how this deal came together, how I met my partner, and the inner workings of the new investment strategy I am implementing with the property.
I found this property through Facebook, in an investors group. Even though the house was in North Tulsa where I did not have the investing experience, I was still super interested in the deal. I made arrangments to see the house as normal.
I am pulling up to the street and I feel an odd sense of deja vu. Once I park in front of the house, I immediately make a connection to something that happened 3 years ago.
Three years ago, when I had no idea what I was doing, I actually had this house under a contract. The house was originally being offered for $29K on Facebook. I viewed the house and instantly offered him $15K. He declined my offer, and I was so desperate at the time for properties, I accepted the original offer of $29K.
This was when I learned rule #1 of investing: Always negotiate with the seller. This house was NOT worth $29K but as I said, I didn’t really know any better at the time.
Anyway, I signed this contract, and my plan was to wholesale the property. I was trying to market it out to a couple of buyers I had at the time, but couldn’t get anyone to bite. I even put it on craigslist, and still nothing. I couldn’t get any momentum on the house, so I was stuck.
I was still very inexperienced at the time and now I was stuck in this awkward deal. I couldn’t move the deal forward and had no idea what to do… so I just ghosted him. He texted me a few times and I straight up didn’t reply.
Fast forward 3 years, and here I am again. Same house, same seller, same everything!
Sure enough, he recognized me, and I thought there was no way he was going to sell me this house. I ended up explaining what had happened three years ago, and we were actually able to make a deal for a lower price this time.
It’s crazy how far my business has come. Before, my goal was to wholesale the property to get fast cash. Now, I showed up ready to buy the property for myself in cash. This would not have been possible without my new business partner.
I originally met my partner through my dad (shoutout Mike). He is a chiropractor that owns one of the biggest chiropractic practices in Tulsa. My dad does treatments there, and basically started hyping me up to his chiropractor for months (what are dads for, right?).
Eventually, I started going in for treatments myself, and we started talking about investment opportunities in Tulsa. After getting to know each other, we scheduled a meeting to discuss a potential deal.
At first, my goal was to raise money to start putting towards my own private investment deals. My plan was to do more fix and flips and rentals. Once we started talking, I realized that he actually had investments already that were bringing in more than I could offer at the time. I really wanted to make some sort of deal, so I had to get creative to make it worth his while.
Then, he brought up his interest in low-income housing projects. I had recently been talking to one of my friends and mentors, Marc Ruiz, about his deals in this area, so I jumped at the opportunity to put a new strategy in motion.
He invested the money and I got to work on my business plan with Marc.
There is a huge negative connotation surrounding North Tulsa, mostly because it has a lot of low-income housing. While this can scare investors away, there is also a lot of untapped potential in this area.
I originally learned this business model from Marc Ruiz, the President of the Tulsa Real Estate Investors Association. From his investment standpoint, I can buy a house for $45K flat, and then rent it out to Section 8 for $800-$950 per month (depending on the size and number of rooms).
The downside is that there are extra measures that must be added to the house that is not typical in a normal renovation. These include putting cages over the AC units, installing floodlights, and buying a good security system.
It does take a little extra work, and it’s not a sure thing that no one will mess with the house, but if you have the time for it, it provides great cash flow.
Basically, the strategy is based on buying the properties in cash, renovating the house to a good standard, and renting it out to Section 8 tenants. If we pay for these houses in cash, then we get 100% of the cash flow from the government, and that will increase our monthly cash flow heavily. Being able to own these houses outright leads to a lot more potential income.
The biggest aspect of making this deal successful is all of the preparation I have had up until this point. Everything just came together at once, which has been a huge turning point for me and my business.
I have been able to learn a completely new real estate investing strategy while already having the knowledge and resources to be able to actually take action and put all of these things into play.
I don’t really believe in luck, but I think when preparation meets opportunity, that’s when things happen for you.
To watch the video version of this post, click HERE.
The main goal of this project was to clean up the house and make it a nice place for someone to live.
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